India announced Wednesday it planned to buy up to 300 fifth-generation stealth fighters that would be jointly developed with Russia in a deal that may be worth up to 30 billion dollars (22 billion euros.

Last year's record arms sales helped mask systemic troubles in Russia's defence industry that have pushed even the Russian military to seek hardware abroad in its drive to overhaul outdated weaponry.

"Russia needs the Indian money like it needs air to accelerate the production of fighter jets for its own military," said Ruslan Pukhov, head of Moscow-based Centre for Analysis of Strategies and Technologies (CAST).

"It's not only good but revolutionary news."

The deal is the biggest ever for India -- one of Russia's top three arms buyers -- and crowned two years of growing defence bookings for Russia that will ensure a steady revenue in the coming years.

But Russia has struggled to innovate technologies to meet the needs of modern warfare and is relying excessively on a few high-performing refurbished Soviet-era models, which form the bulk of its arms sales.

President Dmitry Medvedev lashed out at the "poor" state of the industry last month, as the defence ministry announced it was tripling its procurements budget over the next decade, bucking global trends.

Defence Minister Anatoly Serdyukov stressed Russia would not hesitate to spend the allotted 19 trillion rubles (613 billion dollars) on imported arms where Russian makes "did not meet the required standards."

"Our producers want to issue outdated models, but we don't want to buy them," Serdyukov told the weekly Russian Newsweek.

The world's second-largest arms supplier has been in talks with France to buy its Mistral-class warships in what would be its first ever purchase of hardware from a NATO member.

The planned procurements are part of a massive military reform that gained speed after Russia's 2008 war with Georgia showed the need to drop its Cold War-style structure to ready for modern-day, irregular warfare.

"Overall the situation in the defence industry is very negative and not consistent: It needs to be diversified," military expert Konstantin Makienko said.

Leaders such as Sukhoi, whose exports make up roughly 50 percent of the world's war jet sales, remain competitive -- but they were the exception not the rule, he said.

"Everything which the defence industry is producing is simply a modification of Soviet technology from the 80s. There are no new innovations. We are chewing through our old stocks," independent defence analyst Alexander Golts added.

A key problem, he said, was the slow deterioration in the industry of small-parts producers, an important cog in defence manufacturing but starved for investment since the dissolution of the Soviet planned economy.

Golts said these troubles were to blame for an embarrassing series of failed test launches of Russia's new nuclear-capable Bulava intercontinental missile, which only saw the sixth successful firing out of more than a dozen trials this week.

"With the Bulava, the problems every time were in the details... in the nuts and bolts," he said.

The paradox now is that India may end up with a better model of the advanced fighter jets than its top arms supplier since it can build it "Lego-style" by picking the best technology from arms makers the world over, Pukhov said.

"They can install better avionics and can buy better weapons," he said, adding that the deal could also cut Russia's chances of out-bidding rival French and US jet makers on future weapons contracts.

Moscow is in the race for a contract to supply New Delhi with 126 fighter jets and hundreds of combat helicopters -- one of the world's biggest defence deals in a decade.

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